Another Holiday Gift for Investors

Now that the FOMC announcement is behind us, MoneyShow's Jim Jubak points out to investors that there is another holiday gift for them before the end of the year.

For the week ahead, it's time to celebrate the Central Bank holiday. It's really the holiday from Central Bank news. I think that's crucial for the end of the year Santa Claus rally, the tendency of stocks, in the last week or two of the year, to go up, as professional managers try to window dress and everybody gets excited and volumes go down, you can manipulate stocks more easily and all that stuff. There is such a thing as a Santa Claus rally; it does have a historical track record. This year, the market has been kind of stuck, because it's been waiting for the Central Bank's shoes to drop.

The question was, "Is the Fed going to taper or not taper?" That question was holding down stocks and that uncertainty was holding down stocks. That uncertainty vanished on the 18th when the Fed decided that it would do a very modest taper, taking down its monthly purchase from 85 billion down to 75. The other big Central Bank news is the Bank of Japan had a two-day meeting that started on the 19th, the day after the Fed, and went on the 20th. The uncertainty there was, how much rhetoric is the bank going to invest in saying that they're going to weaken the yen further? Speculation going into that meeting was that we were going to see big news about the yen that would move the yen. Certainly, that was uncertainty over the market. That's also now gone. The question is, you don't have to worry about those things anymore. If you had money on the sidelines, you can put it in. If you're waiting for a time to try to get into the rally, you can put it in. We had a big move up on the Fed news on the 18th, so that sort of starts the season with an, "I'd rather be in than out" mentality. For the last two weeks of the year, so maybe, looking at ahead for not just one week, but two or three, I think there is a good chance that Santa Claus will come down the chimney and deliver something other than coal to Wall Street.